Rent Envy: Lease rates a touchy topic

It’s always challenging to pry out deal specifics on a real estate transaction, but in the current environment, it’s become even tougher for a real estate reporter to pry loose rental rate information. Landlords have turned super sensitive about their lease rates in 2012. Brokers who are involved in deals are being told not to disclose the rates on closed deals. Many leases expire in 2012 and competition for tenants is akin to blood in the water. Tenants are looking for the best deals and their landlords are eager not to lose them.

“We have been told to keep lease rates confidential because landlords don’t want the current tenants to know what the new tenants are paying,” said a veteran industrial broker with one of Albuquerque’s top brokerages.

The underlying assumption is that if the older tenants find out what the new tenants are paying, they will become envious and try to renegotiate to get that same lower rate. Many five-year deals that were signed in 2007 at the top of the market are rolling over in 2012. They are eager to save money and secure the current depressed recessionary rates.

Landlords are trying to hold on to whatever bargaining chips they might have and by keeping a lid on recent rent deals, are hoping to make the best deal possible. With so much space and so few tenants entering the market, it’s doubtful the clamp down on lease rates will win them very many new tenants at reasonable rents.

According to CB Richard Ellis’ preliminary first quarter statistics, office rents are $22 per square foot for Class A space, $17.50 for Class B space and $14 for Class C space. The median industrial lease rate is $6.50 per square foot.